Equinox sells Koricancha mill in Peru to Inca Gold in $12.4 million-deal
Canadian junior Equinox Gold (TSX-V: EQX) is selling its 83%-owned, 350-tonne-per-day Koricancha gold mill in southern Peru to fellow miner Inca Gold Corp. (TSX-V:IO) in a deal valued at Cdn$16.3 million ($12.4 million).
The Vancouver-based firm said the deal included certain recoverable taxes, such as Cdn$6 million in common shares of Inca One, a Cdn $9 million promissory note payable instalments, and working capital of about Cdn$1.3 million payable in cash to Equinox Gold within three years from closing and certain additional recoverable taxes as collected.
Gold production at the mill, located in the country’s Arequipa coastal region, restarted at the end of 2016 and it has been ramping up towards capacity ever since, with the potential to produce 50,000 to 75,000 ounces of gold a year.
Koricancha is located about 50km from Inca One’s own processing facility, 10 minutes from the Pan-American Highway, and the company expects it to generate cost synergies as well as provide a platform for growth.
“The acquisition (…) instantly elevates the company from a small producer to a major player among publicly traded gold processing companies,” Inca One President and CEO, Edward Kelly, said in a separate statement.
Under Equinox’ ownership, Koricancha was buying ore from legally operating small-scale and artisanal miners at a market discount, processing it later into gold and silver, and selling it at spot prices.
The company said the sale would allow it to focus on becoming a leading mid-tier gold producer, its core Aurizona and Castle Mountain gold mines.